Access to Utility Services & Consumer Protection Laws
In the U.S., most people receive essential utility services, such as water, electricity, gas, and telephone service, through individual or family accounts with utility companies. Each individual or family is responsible for paying for the service to the specific residence. Consumers often rely on public utility companies for these services, but some states allow private businesses to compete for consumers’ business. Whether this improves consumers’ access to utility services is a matter of widely varying opinion. State laws, enforced by state regulatory commissions, offer some protections for consumers against unreasonable rates and abrupt termination of services, but consumers do not have a legal right to utility services except in narrowly defined circumstances.
Right to Utility Service
Federal law does not recognize a right to utility services that is separate from an obligation to pay, nor do any states provide for such a right. The law does recognize, however, that utility service is often necessary for basic survival, and that certain groups, particularly low-income people and elderly people, are particularly vulnerable to sudden loss of service. Most states have a “consumers’ bill of rights” for utility services that addresses issues like affordability and termination of services at certain times of year.
Allowing consumers with bad credit scores to pay deposits in installments;
Requiring utility companies to provide a notice of delinquency before terminating service; and
Prohibiting utility companies from terminating service if the customer has requested a deferred payment plan.
It also provides specific protections for elderly and disabled consumers, including deposit waivers, notifications of special services or assistance prior to terminating service; and prohibitions on termination of service during extreme weather events, or if termination of service would pose a danger to the customer’s health.
Affordable Utility Service
Upon moving into a new residence, a consumer must set up utility services. If the consumer is leasing the residence, the lease might require the tenant to apply for services within a defined period of time after signing the lease or moving in. Many city and county ordinances require residences to be connected to the power, water, and sewer systems, and to have active service if anyone lives there. A consumer may therefore be required, by law or contract, to have utility services, whether or not he or she can afford them. State utility commissions generally prohibit utility companies from charging unreasonably high rates for service, and from including undisclosed or hidden fees.
One potential impediment in applying for utility service is a history of missed payments, or other bad credit history. In such a situation, a utility company may require a consumer to provide a deposit. Many state laws limit the amount of the deposit, and the federal Equal Credit Opportunity Act may assist consumers who appear to have bad payment history because of a spouse or roommate.
State law may protect consumers from losing utility service during extreme weather or a health emergency.
Many states protect consumers from losing electricity or gas during periods of extreme weather, even if they are delinquent on payments. In Connecticut, for example, consumers may apply for “hardship status” during the “winter moratorium” from November 1 to May 1, which allows them to defer payment of utility bills. Similar deferments are available in many states during the summer months.
Consumers may also be protected from utility shut-offs during a health emergency. For example, if consumers in Texas notify their utility company of a “critical medical condition” that requires continuation of service to support a person’s life, state law requires the utility company to provide a deferred payment plan. Qualifying consumers are exempt from disconnection for at least 63 days.
In situations where a tenant leases an apartment or condominium, many states require submetering of utility services. This means that an individual tenant or other resident is only responsible for paying for the amount of utility services that he or she actually uses. The Massachusetts Department of Public Health issued a memorandum to local regulators in 2013 after learning that some landlords were billing tenants for proportional utility usage. State law requires billing each residential unit based on meter readings.
Other Consumer Rights
Advocacy organizations like the National Consumer Law Center and the AARP offer resources for consumers regarding utilities and energy. These might include false or inaccurate credit reporting of delinquent payments, termination of service based on a prior resident’s delinquency, and even excessive telemarketing by private utility providers.